Is David Beckham Really Worth It?

It's official. David Beckham will be playing for the LA Galaxy for five years starting in August. Alderac Entertainment Group(AEG), owner of the LA Galaxy, is working on deal with Beckham that amounts to $250 million over five years. In addition to his yearly salary and endorsements, Beckham will receive a stipend of ticket sales as well as 40% of the jersey sales.

AEG believes that this contract will largely increase their overall revenues, so much so that his profit will exceed his cost. Thus far, their assumption is coming to fruition much as they had planned given that season tickets for LA Galaxy games are practically sold out. Do I think that David Beckham will change the attitude about soccer throughout the United States? Depends. Look at the influence Tiger Woods has had on the business of golf. Surely, Beckham is an iconic athlete, but his soccer roots aren't embedded in the United States like that of Tiger Woods. Additionally, American's aren't altogether as religious over soccer as European counterparts. Speaking from a consumer perspective, Americans aren't going to hold the same ardent connection toward's Beckham and his projected brand image. So, while I'm certain advertising and marketing campaigns will be huge in the U.S., how are American's going to respond. Are they going to feel a highly compelled to rush Adidas stores. Again, it runs back to the status of soccer in the U.S.

So, a move like this might take time to adjust to. Yet, Beckham's move to the U.S. might have some significant residual effects if other elite soccer stars follow similar suit. If others realize the marketability and possibilites that the U.S. offers, the commercialization of soccer could gain dominance.

While Beckham contends to affect change over face of soccer in the U.S., it's clear that his intentions for joining the LA Galaxy are purely money-driven; he's a sellout. But does the AEG's contract with Beckham make good business sense?
-KH